"Fracking, farmers, and rural electrification in India"
abstract
What drives heterogeneity in the impacts of large-scale rural electrification? We combine two natural experiments within a regression discontinuity design to shed light on this question. The rapid rise of hydraulic fracturing ("fracking") in the United States induced an unprecedented commodity boom across northwestern India. Leveraging population-based discontinuities in the contemporaneous roll-out of India's massive rural electrification scheme, we show that access to electricity increased non-agricultural employment in villages affected by this exogenous economic shock by over seventy percent. In contrast, electrification had no discernible impact on labor-market outcomes in villages in the rest of the country. This increase in non-farm work was partly driven by the electricity-enabled growth of firms in industries closely related to the ongoing boom. Electrification alone may not be sufficient to deliver economic benefits but—when combined with complementary economic conditions on the ground—it can enable individuals, households and firms to respond to rapidly changing contexts in potentially welfare-enhancing ways.